Introduction

What is system?
System (from Latin systema, in turn from Greek systma) is a set of interacting or interdependent entities, real or abstract, forming an integrated whole ! group of interdependent items that interact regularly to perform a task

"conomic System
!n economic system is a system that in#ol#es the production, distribution and consumption of goods and ser#ices between the entities in a particular society $he economic system is composed of people and institutions, including their relationships to producti#e resources, such as through the con#ention of property %n a gi#en economy, it is the systemic means by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite producti#e resources "&amples of contemporary economic systems include capitalist systems, socialist systems, and economic system of %slam "conomic systems are the economics category that includes the study of respecti#e systems

"conomic System of %slam

%slamic "conomic System implies a mood of satisfying the economics needs of the members of organi'ed society in accordance with is in(ection of )uran and Sunnah $he mood of spending production, distribution and e&change of wealth is determined by the tenor of these in(ections %n this system the economic acti#ities of the members of the society are regulati#e by the certain #alues of which pity, (ustice, bene#olence, cooperation, brotherhood and e*uality are especially important $he sources and origin of these #alues are the +oly )uran and the Sunnah of !llah,s !postle (-./+) $hey are eternal and immutable 0onsumers, producers and traders are must abide these #alues !t one le#el, the state can also use the its powers to implements and enforce these #alues, howe#er, %slam mostly ensure their implementations and daily affairs of life through its system of education and training and by creating a general climate of piety in the society Some 1undamental features of %slamic "conomics System are written below

!ll the wealth belongs to !llah (SW$)2

3!nd gi#e them of the wealth of !llah which +e has gi#en you 3 [An-Nur: 33]

$he community is the trustee of the wealth2

3.elie#e in !llah and +is 4essenger, and spend whereof +e has made you heirs 3[Al-Hadid: 7]

+oarding of wealth is prohibited2

3!nd those who hoard up gold and sil#er and spend not in the way of !llah5 announce to them a painful chastisement 3 [At-Tauba: 34]

0irculation of wealth is a duty2

3Whatsoe#er !llah may restore unto +is 4essenger 6 is due unto !llah and unto +is 4essenger 6 the orphans and the needy So, that it may not be confined to the rich amongst you 3 [Al-Hashr: 7]

Other Economic S stem

$here ! ! Socialism are two economic systems "a#italism

"a#italism
0apitalism is the economic system in which the means of production are distributed to openly competing profit6seeking 0apitalism is not merely an economics system but a peculiar attitude of mind and beha#iour .asically it springs out of the notion of the capitalist that he has earned his wealth by his own ability, skills, knowledge and wisdom Some of the features of capitalism are written below 7 8 9 : ; -ri#ate persons and where in#estments, distribution, income, production and pricing of goods and ser#ices are predominantly determined through the operation of a market economy 0apitalism is originally defined as a mode of production, where it is characteri'ed by the predominant pri#ate ownership of the means of production, distribution and e&change in a mainly market economy 0apitalism is usually considered to in#ol#e the right of indi#iduals and businesses to trade, incorporate, and employ workers, in goods, ser#ices (including finance), labor and land %n 0apitalism, state action is confined to defining and enforcing the basic rules of the market though the state may pro#ide a few basic public goods and infrastructure $he most laisse'6faire capitalist economies, as measured by indices of economic freedom, include countries like +ong <ong and 0anada

Socialism
Socialism or communism means an economics system in which the mean of production are owned by the state ! central directorate controls the production of goods and

ser#ices $he directorate decides the nature, *uantity, and mood of production of goods $his distribution of goods is also directed by the central body Socialism refers to a broad set of economic theories of social organi'ation ad#ocating state or collecti#e ownership and administration of the means of production and distribution of goods, and the creation of an egalitarian society 4odern socialism originated in the late nineteenth6century working class political mo#ement <arl 4ar& posited that socialism would be achie#ed #ia class struggle and a proletarian re#olution which represents the transitional stage between capitalism and communism Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an une*ual society !ll socialists ad#ocate the creation of an egalitarian society, in which wealth and power are distributed more e#enly, although there is considerable disagreement among socialists o#er how, and to what e&tent this could be achie#ed Some features of socialism are written below 7 8 9 : ; = ? Socialism is not a discrete philosophy of fi&ed doctrine and program its branches ad#ocate a degree of social inter#entionism and economic rationali'ation, sometimes opposing each other !nother di#iding feature of the socialist mo#ement is the split on how a socialist economy should be established between the reformists and the re#olutionaries Some socialists ad#ocate complete nationali'ation of the means of production, distribution, and e&change5 While others ad#ocate state control of capital within the framework of a market economy Social democrats propose selecti#e nationali'ation of key national industries in mi&ed economies combined with ta&6funded welfare programs %n the 7>?@s and the 7>A@s, Bugosla#ian, +ungarian, -olish and 0hinese 0ommunists instituted #arious forms of market socialism combining co6operati#e and State ownership models with the free market e&change $his is unlike the earlier theoretical market socialist proposal put forth by Cscar Lange in that it allows market forces, rather than central planners to guide production and e&change

$i%%erence bet&een Islamic economic S stem and others '"a#italism and Socialism(
+ere we will discuss the difference between the %slamic and Cther "conomic System like 0apitalism and Socialism briefly by comparing %slamic and Cther "conomic Systems in respect of their basic concepts 0omparison of 0apitalism with %slam2 0apitalism and %slam are compared in respect of their basic economic concepts as under2

)* +i,ht to o&nershi#:

$he e&istence of right of pri#ate ownership of property is the hallmark of capitalism $he system belie#es in the pri#ate ownership of the means of production, distribution and e&change which are managed and controlled by indi#iduals or groups of indi#iduals for pri#ate profit $he unrestricted right to own property and earn profits leads to concentration of wealth in few hands $his necessarily disturbs the balance of distribution of wealth and income in society $he economic disparities and the e#er6increasing gulf between the rich and the poor sows the seeds of discord and destruction in the capitalist society %slamic concept of ownership is uni*ue one Cwnership, in reality, belongs to God while some rights only #est in man so that he may fulfill the purpose of God, that is the purpose of community by acting as a trustee for those in need %n other words, what !llah has created for benefit of and ser#ice to man belongs collecti#ely to the whole humanity Legal ownership by the indi#idual is recogni'ed in %slam but it is sub(ect to the moral obligation that in all wealth all sections of society ha#e the right to share $hus pri#ate or indi#idual ownership in %slam is not unlimited or unrestricted !ll the means of production are not placed under pri#ate ownership as public ownership of certain things of common utility e&ists side by side with it in an %slamic state %slamic state has also the right to nationali'e certain things which are under pri#ate ownership for the benefit of the community %n this way the limited right of pri#ate ownership with law of inheritance which distributes the estate of the deceased among fairly large number of heirs a#erts concentration of wealth in few hands and thus pre#ents class6conflict

-* Economic .reedom:
/nrestricted economic freedom and non6interference of the state in such freedom is another feature of capitalist economy "#ery indi#idual is at liberty to initiate, organi'e and establish any enterprise, business, trade, profession, etc +e has full freedom to earn as much income as he can and spend his wealth in whate#er manner he likes $his unrestricted economic freedom generally leads to earning of wealth through foul means such as gambling and prostitution %t also encourages business malpractices such as smuggling, black marketing, profiteering, hoarding, speculation, forward transactions, fraud, e&ploitation, adulteration, etc $hus a mad6race for earning wealth becomes order of the day and high social and moral #alues such as fraternity, brotherhood, mutual help, lo#e, bene#olence, truthfulness gi#e place to selfishness, callousness, hatred, falsehood and mistrust 0apitalism, in fact, has come to signify a religion of money or dollar dictatorship %slam also allows economic freedom to an indi#idual who is at liberty to earn wealth, own it and spend his wealth at his discretion .ut the freedom gi#en by %slam in economic sphere is not unlimited %slam makes distinction between halal (permitted being lawful) and haram (forbidden being unlawful) in e#ery economic acti#ity embracing #ast fields of production, e&change and consumption 8 Similarly consumption of wealth on lu&urious li#ing, haram things and e&tra#agant spending is also forbidden ! 4uslim is re*uired to pay Dakat and spend whate#er he can for the cause of the poor and the

destitute !ll these regulations promote moral #alues in %slamic society and eliminate mad6race for wealth and material gains

3* /ono#ol :
0ompetition, which is another feature of capitalism, leads to the destruction of minor enterprises and firms $his encourages merger of smaller business organisations into ma(or ones and thus monopolies or cartels are established 4onopolies kill free competition, cause inflation in prices and ultimately result into unemployment $hus labour and consumer are both e&ploited in such a situation 4oreo#er, trade6cycles, unplanned production, o#er6competition, increasing accumulation of capital upsets the balance between production and consumption which sometimes leads to economic depressions %slam forbids unhealthy competition and bans all the ways which lead to it %slam also disallows establishment of monopolies $he -rophet of %slam is reported to ha#e said Whoe#er monopolies is a sinner "specially monopolies o#er food6stuffs or articles of daily use are forbidden by %slam 0ommodities and ser#ices which are of the common interest of the community are ne#er allowed to be monopoli'ed

4* Institutions o% Interest:
$he %nstitution of banking and interest is the life6blood of capitalistic form of economy 1or business, trade and industry especially for big pro(ects and economic #entures, huge funds are re*uired which no indi#idual or firm can arrange $his leads to establishment of banks who borrow capital from depositors and in#estors on lower rate of interest and lend it to business enterprises on higher rate of interest $hus the institution of interest has become part and parcel of capitalism %slam considers interest as the most e&ploiti#e institution for humanity and has abolished it root and branch in its e#ery form and manifestation !ccording to al6)uran taking of interest tantamount to war against God and +is !postle, while according to -rophet 4uhammad (-./+) interest is worse than adultery %slam builds its economy on interest free basis and promotes profit and partnership as incenti#e for sa#ing and in#estment

0* E1#loitation:
/nrestricted right of economic freedom and uncontrolled right of pri#ate ownership has practically resulted into e&ploitation "conomic e&ploitation of the weak by the strong is an order of the day in a capitalist society Wealth is the religion of e#ery person (but a few honorable e&ceptions) and earning of it through fair or foul means is his creed 0onse*uently, e#eryone e&ploits the other economically with a #iew to gather as much fortune as possible

%slamic economic system, on the other hand, ensures elimination of e&ploitation of one man by the other 4any effecti#e measures ha#e been taken by %slam to do so Eiba or usury is one of the worst instruments of human e&ploitation and this has been abolished in all forms by %slam = Fistribution of Wealth2 0apitalism does not belie#e in fair and (ust distribution of wealth Since it belie#ers in full economic freedom and pri#ate ownership of means of production 0oncentration of wealth in few hands takes place while huge ma(ority of the populace is depri#ed of the #ery basic necessities of life $he pri#ileged few li#e in lu&ury while po#erty, ignorance, disease and unemployment is the lot of the multitude $his disturbed balance of distribution of economic resources and unbridgeable gulf between the ha#es and ha#e6nots ultimately leads to class struggle and ultimate o#erthrow of the #ery system %slam on the one hand guarantees pro#ision of basic human needs such as food, clothing and shelter to e#eryone and, on the other hand, ensures fair and e*uitable distribution of wealth and economic resources among all 1or bridging the gulf between the rich and the poor and for ensuring e*uitable distribution of wealth, %slam has taken many steps such as Dakat and Sada*at, laws of inheritance and compulsory contributions in the form of ta&es and duties $o pre#ent concentration of wealth in few hands %slamic economic code has taken measures like abolition of interest, prohibition of earning of wealth through haram means, prohibition of hoarding of wealth, etc

"om#arison o% Socialism &ith Islam

Socialism and %slam are compared in respect of their basic economic perceptions as under2

)* O&nershi#:
State ownership of all property and means of production, as stated earlier, is the most distincti#e feature of socialist economy -ri#ate ownership of property and of all the means of production, distribution and e&change is totally abolished $his leads to management of these means of production by the bureaucracy .ureaucratic running of economic machinery results into inefficiency, low production and collapse since the bureaucrats lack initiati#e, follow rigid rules and are not trained to run business %slam does not abolish pri#ate ownership of property and does not place all the means of production, distribution and e&change in the hands of the state !lthough %slam upholds public ownership of some means of production which are the common utility to the people, but it concedes the rights of pri#ate ownership of ma(ority of the means of production and distribution /nlike socialism, %slam gi#es economic freedom to an indi#idual who can earn wealth, own it and en(oy it within certain limits pro#ided he does not infringe teachings of %slam in the process of earning, owning and consuming it

-* /aterialism:

Socialism, especially scientific socialism rests on a purely materialistic basis Fialectic materialism or materialistic interpretation of history is the most #ital element of 4ar&ism 4ar& has sought to e&plain e#ery e#ent in history on economic grounds !ccording to him, origin of e#ery acti#ity of man lies in economic factors 4ar& does not belie#e in religion which, in his #iew, is a bourgeois in#ention to keep the proletariat under their perpetual control "ngels said 2 4atter is the only real thing in the world $he communists belie#e that human reason is (ust a manifestation of matter and soul has no independent e&istence of its own but is a product of matter $hey hold that all the different stages of human progress are determined by the interplay of conflicting economic forces alone, thus lea#ing no place for God,s will %slam is the perfect and final religion re#ealed by Lord of the uni#erse for the guidance of mankind %ts foremost aim is to ensure Gfalah, or well6being of humanity in this world and in the +ereafter %t does not gi#e importance to matter only at the cost of spirit as does a secular ideology like socialism %slam belie#es in the material as well as moral and spiritual welfare of its followers at micro and macro le#el 1ollowers of %slam belie#e in one God, in all the -rophets and +oly Scriptures, in the +ereafter, in the moral code and in the uni#ersal brotherhood of mankind

3* +e,imentation and Totalitarianism:

0ommunism sets up a totalitarian state in which bourgeois class is li*uidated and strong dictatorship of the proletariat class is established 1undamental rights and ci#il liberties are crushed and man is rendered merely to the status of an economic animal %n the name of bread he is depri#ed of freedom of conscience, freedom to think, freedom to speak and freedom to act %n order to achie#e economic ob(ecti#es and in order to work the huge producti#e machine efficiently, the state becomes all powerful and establishes complete regimentation %slam, on the contrary, belie#es in democratic form of go#ernment as the )uran, its re#ealed book, en(oins upon -rophet 4uhammad (-./+) to conduct public affairs in consultation with his followers %slam gi#es all the fundamental rights and ci#il liberties to the people li#ing in the %slamic state %slamic state does not establish dictatorship of any class5 neither is it a totalitarian state $he state under %slam does not wither away5 rather it becomes indispensable as it discharges all the functions of a traditional state and modern welfare state

4*Economic E2ualit :
"conomic e*uality is another claim of communism although it has ne#er been reali'ed so far %n theory at least it is claimed that the rights of the indi#iduals in the economic sphere are go#erned by the principles of e*uality "#ery indi#idual is pro#ided with the necessaries of life according to his needs %slam, unlike communism, recogni'es that there is no e*uality among human beings as regards the economic means and possession of worldly wealth $he )uran considers these ine*ualities and disparities in the distribution of wealth as part of Fi#ine economic

order and, therefore, does not try to eliminate them by unnatural and artificial means %slam does not tolerate the e&istence of unbridgeable gulf between the rich and the poor, but unlike socialism it does not belie#e in e*ual distribution of wealth !ctually %slam belie#es in fair, (ust and e*uitable distribution of wealth and in social (ustice 1or ensuring e*uitable distribution, %slam has taken many steps such as institution of Dakat and Sada*at, laws of inheritance and be*uest, #oluntary alms and le#y of compulsory contributions in the form of ta&es and duties